Managing inventories can be one of the most problematic and costly aspects of running a
startup business. There are plenty of both hidden and unexpected costs to purchasing and
storing products. If you do not pay attention, these costs could greatly affect your business’
budget and profits.
Traditionally, managing inventory was a manual process that involved the services of several
employees. Development of inventory management software streamlines the process, making
it easier to take control of stock and reduce unnecessary costs. Here are some of the ways
inventory management software can help in making your business more efficient and
preventing unnecessary losses due to hidden costs.
Automates Your Inventory
Managing inventory takes significant time and effort. Staff have to check the items as they
enter into your store or warehouse, scan each one and then insert them into the business’
database. The process is repeated when a customer or a retailer orders merchandise from your
store. There is more room for error when executing this process manually. Staff can make
mistakes with counting the items or managing the data within the database. By using an
inventory management system, the chances for human error is reduced.
Through the use of inventory management software, entrepreneurs have a more accurate
picture of how much stock they have at any given point. Encoding and updating data becomes
quicker and easier. This allows entrepreneurs to save more time and money.
Prevents Dead Stock
There are items that become more difficult to sell over time. For instance, items with an expiry
date such as food or makeup need to be sold before they spoil. Clothes and furniture can go out
of style while electronics can become obsolete. By using inventory management software, you
can avoid having dead stock by determining the optimal time for selling your items.
Prioritizes Business Demands
Inventory management software can reduce cash problems within the business. The software
lets you see what products are selling well, which ones are not and if there is a need to order
more products. By seeing your profits and your inventory, you can better determine when you
need to restock on items. This ensures that you have enough stock when customers need to
order from your business and avoids any sales losses. On the other hand, this also prevents you
from ordering too much of one particular product.
Reduces Manpower Cost
Some inventory management systems be easily accessed from any device that is connected to
the Internet. Entrepreneurs can set permissions as to who can access the system and when.
Since it is online, the system can be accessed at any time of the day, even when all of your
staff have gone to bed. No need to hire more staff to answer your questions if you need data
during ungodly hours.
Avoids Impractical Item Stocking
Entrepreneurs may tend to make the mistake of falling in love with the merchandise that they
sell. They hold on to the items until they can get the right people to buy them. When it comes
to business, if it is not making you money, it is better to find a way to get rid of it. This may
entail selling at a lower price than what you bought it for from the supplier. This way, you’ll free
up space in your store or warehouse for items that will be more profitable.
However, this may not be true for all types of businesses. If your shop is well known for selling
rare items then it may more profitable for you to hold on to the merchandise for a longer
period of time. By using an inventory management system, you’ll be able to determine which of
the two categories your business falls under and identify when you should sell or hold on to
The IRS in the US allows businesses to deduct their inventory costs from the total taxes they
have to pay the government. This means your inventory and how well you keep track of it can
affect the taxes you pay. By using an inventory management system, entrepreneurs have a
better idea of how much stock their business dealt with throughout the year and include those
in their tax forms.
Manually encoding items into a database is open to increased errors. Staff can make mistakes
when it comes to plugging in the item code, the number of products that went in or out, their
condition and other aspects. Relying too much on manual labor also makes it easier for people
to steal items. With automated systems, items are traceable and can be audited more quickly.
This gives business owners peace of mind while deterring theft.
Regardless of the size of the business, automating the system using inventory management
software provides a long list of benefits for business owners. At this day and age, effective
management of inventory can spell the difference between business success and failure.
Investing in inventory management software may entail a lot of resource up front but the
investment can pay off for your business.
Oliver Threlfall is the CEO of TechLoc, a provider of innovative assets and workforce management technology for businesses. Techloc asset tracking and business systems now has three international offices in the US, Canada and Australia and continues to roll out all over the globe. A biology major at Deakin University and a born entrepreneur, Oliver also founded Steamatic Australia, a leading cleaning and restoration firm servicing Australian businesses and families.